Indian Indices Continue to Trade Lower; Banking and Telecom Stocks Witness Selling

Thu, 20 Aug 12:30 pm

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Share markets in India continued to witness selling pressure and are presently trading on a negative note.

The BSE Sensex is trading down by 287 points at 38,326 levels.

NTPC and Power Grid Corporation of India are among the top gainers today.

Meanwhile, the NSE Nifty is trading down by 69 points.

The BSE Mid Cap index is trading up by 0.7%.

The BSE Small Cap index is trading up by 0.9%. Smallcap stocks are witnessing buying interest today.

On the sectoral front, banking stocks and telecom stocks are witnessing most of the selling pressure.

The rupee is trading at 75.00 against the US$.

Stocks from the power sector are witnessing huge buying interest as the Cabinet Committee on Economic Affairs (CCEA) on Wednesday relaxed the borrowing limits for the state government-owned power distribution companies (discoms) as a one-time measure.

Currently, discoms can borrow only up to 25% of their previous year's working capital under the limits stipulated in the UDAY scheme. Borrowing were tied to discoms' operational performance to ensure discipline.

The limit, however, has now been relaxed for a one-time lending. This would help those discoms that have exhausted their borrowing limits and will assist power retailers to clear their dues to generation and transmission companies to help reduce stress in the sector.

Stocks such as Tata Power, Power Finance Corporation, and REC were among the top gainers from the power sector on the back of above news.

How the above infusion helps the liquidity in the power sector in the short term remains to be seen. Meanwhile, we will keep you updated on all the developments from this space. Stay tuned.

Tata Power was also among the top buzzing stocks today after the company exhibited its current business structure along with plans to achieve the aim of becoming one of the top 2 energy companies in India in the future.

Moving on to news from the commodity space...

Gold prices on MCX continued to witness selling today and were trading down by 0.6% at Rs 52,287 per 10 grams at the time of writing.

Gold had fallen yesterday after a sharp rebound in the US dollar index. US bond yields also recovered and triggered selling in the precious metal.

Despite the US Federal Reserve's dovish comments in the July policy meeting and the release of Fed minutes, both the precious metals slipped.

The Federal Reserve expressed concern about the recovery of the US economy and interest rates were expected to be soft till 2021. The Fed reiterated that the economic downturn triggered by the coronavirus pandemic faced a highly uncertain path and additional fiscal stimulus would be needed to support the economy.

Even with the correction in prices, gold and silver remain among the best performing commodities this year to combat the fallout from the coronavirus pandemic. Last week, gold had hit a record high of Rs 56,191 in Indian markets amid a global rally.

Speaking of the precious yellow metal, how lucrative has gold been as a long-term investment in India?

The chart below shows the annual returns on gold over the last 15 years...

As you can see, barring just two years - 2013 and 2015, gold has delivered positive returns in 13 of the last 15 years.

Even with the recent volatility in prices, gold and silver remain among the best performing commodities this year to combat the fallout from the coronavirus pandemic. Earlier this month, gold had hit a record high of Rs 56,191 in Indian markets amid a global rally.

So, is it time to book profits in gold and silver?

In this video below, India's no. 1 trader, Vijay Bhambwani tells what he thinks you should do with your bullion holdings.

Tune in here:

To know more about gold, just visit our Youtube Playlist on gold investing.

And to know what's moving the Indian stock markets today, check out the most recent share market updates here.

For information on how to pick stocks that have the potential to deliver big returns, download our special report now!

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